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Picking New Winners

Rising from the ashes of the stock market crash are a number of banks and other companies that have caught the eye of investors. Many of the new companies, banks especially, are very new, with little to go on for fundamental analysis except that some of the stars of the old banking industry have split and are finding a new life in this new world of penny stocks. This may be a case of knowing what penny stocks to watch as extensive experience is mixed with new opportunity to make a new world of successful companies. It will be a case of picking new winners.

How to invest in the economy during hard times is turning into how to invest in the best and brightest with new ideas. There is an old saying that public and publicly companies start out with a public purpose only to be slowly but surely bent to the purpose of their managers. The decline of American companies such as Xerox, Kodak, IBM, and even AT&T can be tracked back to a degree to middle and higher level managers making decisions that protected their jobs and did not rock the corporate boat, as it was slowly sinking.

When should you invest in the stock market is no longer the question. The recovery is sufficiently along, despite a slow recovery in unemployment, that it is high to be looking for companies with new ideas, fresh but knowledgeable management and free from the shackles of corporate stagnation. As time goes on value investing may come back in vogue as promising companies produce earnings but fail to be seen by money managers and stock analysts.

Looking for new talent is nothing new to stock investing. Having such a fresh batch of talent come to the fore has not been seen for a while. The situation now as the recession is mending is remindful of post war Europe and Japan, picking up the pieces and approaching business with new eyes. Picking new winners is also mindful of two Hewlett Packard dropouts, Jobs and Wasniak, cobbling desktop computers together in the garage to start Apple Computer. The problem for the old stalwart companies is not only the loss of capital with the market crash but the loss of talent that is now on the outside chipping away the business of their former bosses.

Will blue chips recover completely when a lot of their talent went out the door? With the stock investing world picking new winners capital may flow to the new upstarts and away from the grand old companies. Likewise, talent goes with the winners. New, exciting companies attract smart, young experts in their respective fields. In less restrictive working environments these workers are typically more creative making their companies more successful. Picking new winners rising from the ashes of the stock market crash and the slowly mending recession could be very lucrative to the investors who do their homework. Looking for new products, new technology, or new ideas might be a way to find these companies before they get pricey. Another way picking new winners might be to look for the names of those missing from reports of large companies and finding their names on the quarterly reports of the young upstarts.





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